As laid out in the 2018 Federal Budget, certain trusts will be subject to new reporting requirements such as disclosing the identity of all trustees, beneficiaries, and settlors of the trust, as well as the identity of each person who has the ability of controlling how the trustees are to distribute the trust income and/or capital amongst the beneficiaries. These new reporting requirements will be effective for the 2021 taxation year.
The following trusts will be excluded from the new disclosure requirements:
- Mutual fund trusts, segregated funds, and master trusts
- Trusts governed by registered plans
- Lawyers’ general trust accounts
- Graduated rate estates and qualified disability trusts
- Trusts that qualify as non-profit organizations or registered charities
- Trusts that have been in existence for less than three months or that generally hold less than $50,000 in assets throughout the taxation year
Trusts which fail to comply with the new reporting requirements will be subject to penalties, equal to $25 for each day the reporting is late, with a minimum penalty of $100 and a maximum penalty of $2,500. Gross negligence penalties of up to 5% of the maximum fair market value of the property held by the trust in the subject year may also apply. Existing late filing penalties will also continue to apply.
Contact us today for more information on how the 2018 Federal Budget may affect you and your business.